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Retailers Should Think Twice Before Advertising Comparison Pricing

Overstock.com said it would appeal the tentative ruling of a California trial court which prohibits the company from comparison price advertising unless done in conformity with court-mandated practices, which Overstock.com says diverge widely from industry standards.

The problem for Overstock.com began in 2010 when a group of district attorneys in California sued the online retailer, accusing it of overstating its deals and misleading consumers, according to this CNN Money report.

The article cited an example of a patio set advertised for $449.99 and claiming that the list price for the set was $999. “But the furniture arrived with a Wal-Mart sticker showing the price to be $247.”

Overstock.com General Counsel Mark Griffin told ABC News that the manufacturer had given Overstock.com its retail price, and unbeknownst to it, “another manufacturer sold the price elsewhere.”

In a press statement Overstock.com President Stormy Simon called the ruling unjust but said the company would follow the ruling. She said the effect of that ruling would be small because they were “already fanatic about getting this right.” She also said if the tentative ruling becomes final, the company will file an appeal “as soon as possible.”

Overstock.com said the court’s ruling would require more elaborate price comparison disclosures on individual product website pages, depending on the type of comparison made.

It’s not clear how the ruling will impact other retailers.

“Assuming that other retailers will have to follow the same rules as Overstock.com, traditional retail stores will have to make lengthy disclosures on paper price tags disclosing their methods of price comparisons,” Overstock.com wrote in its statement.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.